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3 Leadership Trends of 2014

The styles, tools, and theories of management that CEOs and academics are espousing this year.

1. Unlocking hidden strengths

Chris White, managing director of the Center for Positive Organizations at The University of Michigan’s Ross School of Business, tells Inc. that today’s best leaders are engaging in “endogenous resourcing,” an academic term that refers to finding unique ways to unlock employees’ hidden strengths. White explains that by focusing on building relationships with your employees, you can discover their full capabilities while also providing them with a feeling of ownership over their work and a greater sense of well-being. “There are positive physiological outcomes from this type of leadership that can be scaled to whole companies,” he says.

A good example of endogenous resourcing can be found in the leadership style of Whole Foods co-CEO Walter Robb. “He draws on individuals’ strengths in a way that is firm yet deferential and open,” White says. “He’s able to be collaborative but is also clear in his directions.”

White says that when new employees begin working at a Whole Foods store, they undergo a three-month trial period. At the end of that time, their team votes on whether they will keep the job or be fired. “This practice helps to build ownership and collective responsibility, which are all resources from within,” White says. “You can’t buy that stuff–you have to lead it.”

2. Giving second chances

Fred Keller, founder and CEO of Grand Rapids, Michigan-based plastics manufacturing company Cascade Engineering, has led his multimillion-dollar business based on a quote from 18th-century theologian and social reformer John Wesley: “Do all the good you can.“

Cascade, which Keller started in 1973, now has 12 business units around the world, producing auto parts, furniture components, waste containers, and installing wind turbines, solar panels, and affordable water filters for the developing world. Cascade is the largest manufacturing business certified as a B Corporation, which means it has made a commitment to solving social and environmental problems and meets a lengthy set of performance, accountability, and transparency standards.

Keller, who also teaches sustainable business practices at Cornell University’s Samuel Curtis Johnson Graduate School of Management, says his leadership style is ruled by his heart first and his brain second. Cascade’s signature program is “Welfare to Career,” where the company brings aboard people who have been on government assistance for long periods. Keller says the program has saved the state of Michigan millions of dollars by getting people off the welfare rolls.

“It isn’t just about providing a job, it’s about providing a career,” Keller says. But it hasn’t been easy. “We had to learn how to change our culture to be more accepting and welcoming. Guess what? When we did this for people who have been on welfare it made our culture more positive throughout for everyone. And it turns out to be good for business.”

After the program took off and the culture changed, Cascade’s retention rates rose, as did employee satisfaction. About five years ago, Keller launched a new program to hire ex-felons.

Management policies like these are spreading, and taking on a greater importance all the time, Keller maintains. “There is an increasing sense that our politicians are not going to solve our problems. They have demonstrated that they can’t even keep the trains coming on time,” he says. “But then who is? It’s up to business leaders who align their businesses to solve some of the world’s problems.”

3. Implementing democracy

Avinoam Nowogrodski, CEO of project-management software company Clarizen, says the command-and-control style of leadership popular in decades past doesn’t work for today’s business environment. “People want a voice, people want to participate, and this requires democratic principles,” he says.

Nowogrodski attributes his company’s success to hiring the right people and leading democratically. He says he hires people who have three distinct characteristics–curiosity, modesty, and passion–or what he calls the “Clarizen DNA.”

Once you have people in place who exhibit those key traits, you can implement a democracy focused on individual participation and empowerment, he says.

“It requires all the principles of democracy: People can say whatever they want to say and you want to cultivate their voice and make sure they are outspoken. There needs to be a justice system where everyone is equal. This makes people feel as if they’re in a fair fight, things are possible instead of being dictated from above,” he says. “We make our employees feel like they contribute more than they ever did at other companies and are a part of a big story.”

WILL YAKOWICZ is a reporter at Inc. magazine. He has covered business, crime and politics at Patch.com, and his work has been published in Tablet Magazine and The Brooklyn Paper. He lives in Brooklyn, New York.@WillYakowicz